HOUSTON, Nov. 23 /PRNewswire-FirstCall/ -- BJ Services Company
(NYSE: BJS; PCX; CBOE) today reported a net loss from continuing
operations of $2.8 million, or $(0.01) per diluted share, for the
fourth quarter of fiscal 2009, which ended September 30, 2009,
compared to a net loss from continuing operations of $0.10 per
diluted share for the previous quarter and net income from
continuing operations of $0.59 per diluted share for the fourth
quarter of fiscal 2008. Discontinued operations, consisting of the
Company's pressure pumping business in Russia, accounted for a net
loss of $0.02 per diluted share in the fourth quarter of fiscal
2009, compared to a net loss of $0.01 per diluted share for the
previous quarter and a net loss of $0.02 per diluted share for the
fourth quarter of fiscal 2008. The Company completed its last
pressure pumping contract in Russia in July, so the Company
reclassified its Russia pressure pumping business as a discontinued
operation and, accordingly, recast prior periods to conform to that
presentation. Revenue in the fourth quarter of fiscal 2009 was
$878.2 million, a 13% increase from the $780.2 million reported in
the previous quarter and a 42% decrease from the $1.51 billion
reported in the prior year's September quarter. Operating loss for
the quarter was $15.0 million, compared to an operating loss of
$39.1 million for the previous quarter and operating income of
$262.2 million in the fourth quarter of fiscal 2008. Fourth quarter
results included $5.3 million of transaction costs related to the
pending merger with Baker Hughes Incorporated. Operating income
(loss) as a percentage of revenue was (1.7) % in the fourth quarter
of fiscal 2009, compared to (5.0) % in the previous quarter and
17.4% in the comparable quarter of the prior year. Commenting on
the results, Chairman and CEO Bill Stewart said, "Our fourth
quarter results reflected some sequential improvement in U.S.
drilling activity, particularly with respect to oil exploration,
and some margin improvement that primarily resulted because of
asset impairment and employee termination costs recorded in the
third quarter that did not recur in the fourth quarter. Drilling
activity in the U.S., as measured by average active drilling rigs,
increased 4% sequentially, but declined 51% compared to the same
period a year ago. Natural gas drilling was 5% lower sequentially,
and North America natural gas prices show little sign of meaningful
near-term recovery. Our Canadian operations were slow to recover
from the spring break-up period, but showed significant improvement
from the third fiscal quarter. International pressure pumping
revenues were flat compared to the prior quarter, as was
international drilling activity, with sequential margin erosion
particularly in Latin America. Our Oilfield Services Group results
rebounded significantly from a very weak third fiscal quarter.
"While we experienced meaningful sequential improvement and
generally stable U.S. pricing during the quarter, near term market
conditions overall are still very challenging. Looking at the
longer term horizon, we have more reason for optimism. We were
recently awarded a four-year contract, renewable for two additional
two-year periods, to provide coiled tubing services for Statoil ASA
in Norway with estimated revenues of up to $250 million over the
full eight-year period, and a $50 million letter of intent for a
three-year pipeline construction contract on the Nord Stream gas
pipeline project extending from Russia to Germany via the Baltic
Sea. Revenue related to these contracts is expected to begin in
early fiscal 2011. And, of course, we look forward to completing
the merger with Baker Hughes in the first calendar quarter of 2010
and beginning to realize the benefits of integrating these two
industry leaders into a more competitive global enterprise." During
the quarter, cash and cash equivalents increased $51.3 million to
$282.6 million, as the Company continued to generate positive
operating cash flow. The Company repaid $14.3 million of
indebtedness, reducing outstanding debt to $506.1 million. Other
uses of cash during the quarter included capital expenditures of
$80.0 million and the payment of $14.6 million in dividends.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS UNAUDITED (in
thousands except per share amounts) Three Months Ended
------------------ September 30 June 30 ------------ ------- 2009
2008 2009 ---- ---- ---- Revenue $878,172 $1,510,588 $780,245
Operating Expenses: Cost of sales and services 810,021 1,155,928
15,922 Research and engineering 16,133 17,323 15,922 Marketing
24,849 30,850 25,896 General and administrative 40,763 41,797
35,880 Loss on disposal of assets, net 1,380 2,516 9,726 -----
----- ----- Total operating expenses 893,146 1,248,414 819,372
------- --------- ------- Operating income (loss) (14,974) 262,174
(39,127) Interest expense (6,741) (6,705) (7,057) Interest income
27 528 334 Other expense, net (5,780) (1,617) (4,647) ------ ------
------ Income (loss) from continuing operations before income taxes
(27,468) 254,380 (50,497) Income taxes (24,677) 79,182 (21,169)
------- ------ ------- Income (loss) from continuing operations
(2,791) 175,198 (29,328) Loss from discontinued operations, net of
tax (7,156) (7,103) (3,008) ------ ------ ------ Net income (loss)
$(9,947) $168,095 $(32,336) ======= ======== ======== Basic
Earnings (Loss) Per Share: Continuing operations $(0.01) $0.59
$(0.10) Discontinued operations (0.02) (0.02) (0.01) ----- -----
----- Net income (loss) per share $(0.03) $0.57 $(0.11) ======
===== ====== Diluted Earnings (Loss) Per Share: Continuing
operations $(0.01) $0.59 $(0.10) Discontinued operations (0.02)
(0.02) (0.01) ----- ----- ----- Net income (loss) per share $(0.03)
$0.57 $(0.11) ====== ===== ====== Weighted Average Shares
Outstanding: Basic 292,123 294,153 292,087 Diluted 292,123 296,050
292,087 Supplemental Data: Depreciation and amortization $78,126
$72,593 $72,610 Capital expenditures 79,974 173,085 76,131 Debt
506,112 556,340 520,373 CONDENSED CONSOLIDATED STATEMENT OF
OPERATIONS (in thousands except per share amounts) Fiscal Year
Ended September 30 ------------------------------ 2009 2008 ----
---- Revenue $4,121,897 $5,359,077 Operating Expenses: Cost of
sales and services 3,523,838 4,091,262 Research and engineering
66,270 71,997 Marketing 108,186 120,655 General and administrative
159,094 158,975 Loss on disposal of assets, net 13,540 2,894
Pension settlement 21,695 - ------ --- Total operating expenses
3,892,623 4,445,783 --------- --------- Operating income 229,274
913,294 Interest expense (27,248) (28,107) Interest income 1,224
1,912 Other expense, net (9,083) (8,579) ------ ------ Income from
continuing operations before income taxes 194,167 878,520 Income
taxes 28,196 258,034 ------ ------- Income from continuing
operations 165,971 620,486 ------- ------- Loss from discontinued
operations, net of tax (16,028) (11,121) ------- ------- Net income
$149,943 $609,365 -------- -------- Basic Earnings (Loss) Per
Share: Continuing operations $0.57 $2.11 Discontinued operations
(0.06) (0.03) ----- ----- Net income per share $0.51 $2.08 -----
----- Diluted Earnings (Loss) Per Share: Continuing operations
$0.57 $2.10 Discontinued operations (0.06) (0.04) ----- ----- Net
income per share $0.51 $2.06 ----- ----- Weighted Average Shares
Outstanding: Basic 292,239 293,479 Diluted 293,393 295,766
Supplemental Data: Depreciation and amortization $296,165 $263,970
Capital expenditures 394,192 605,584 Operating Highlights Following
are the results of operations for the three months ended September
30, 2009, September 30, 2008 and June 30, 2009 and for the fiscal
years ended September 30, 2009 and 2008: Three Months Ended Fiscal
Year Ended ------------------ ----------------- September 30 June
30 September 30 ------------ ------- ------------ 2009 2008 2009
2009 2008 ---- ---- ---- ---- ---- U.S./Mexico Pressure Pumping
Revenue $342,697 $755,240 $314,012 $1,853,831 $2,743,383 Operating
Income (Loss) (34,931) 147,942 (38,540) 104,094 597,837 Operating
Margins -10% 20% -12% 6% 22% Canada Pressure Pumping Revenue
$58,995 $133,702 $23,259 $309,435 $442,474 Operating Income (Loss)
(1,516) 19,463 (15,633) 17,610 34,341 Operating Margins -3% 15%
-67% 6% 8% International Pressure Pumping Revenue $257,552 $335,840
$258,078 $1,098,493 $1,185,388 Operating Income 21,645 57,689
27,669 121,463 178,716 Operating Margins 8% 17% 11% 11% 15%
Oilfield Services Group Revenue $218,928 $285,806 $184,896 $860,138
$987,832 Operating Income 30,338 58,735 10,935 102,928 191,670
Operating Margins 14% 21% 6% 12% 19% Corporate Operating Loss
$(30,510) $(21,655) $(23,558) $(116,821) $(89,270) September
Quarter Review U.S./Mexico Pressure Pumping Services fourth quarter
2009 revenue of $342.7 million was 9% higher than the June 2009
quarter (sequential) with average active drilling rigs for the same
period increasing 4%. Compared to the September 2008 quarter
(year-over-year), revenue decreased 55% on a 47% decrease in
average active drilling rigs. Sequentially, revenues improved most
notably in the Permian Basin, Rocky Mountains and East Texas,
partially offset by sequential declines in South Texas and Gulf of
Mexico areas. For the year-over-year periods, the steep declines
were attributable to lower fracturing and cementing activity in the
U.S., coupled with a reduction in pricing for our services and
products. Mexico revenues increased year-over-year, due to
increased activity both onshore and offshore. Operating margin for
U.S./Mexico improved slightly to a loss of (10)% in the fourth
quarter from an operating loss of (12)% in the previous quarter,
primarily as a result of asset impairment and employee severance
costs recorded in the third quarter not repeating in the fourth
quarter. Year-over-year, operating margin declined from a positive
operating margin of 20% in the same quarter last year. The lower
operating margin in fiscal 2009 was primarily attributable to lower
U.S. drilling activity and lower pricing for our services and
products. Canada Pressure Pumping Services fourth quarter 2009
revenue of $59.0 million was 154% higher sequentially with average
drilling rig activity up 105%, primarily reflecting increased
drilling activity coming out of the spring break-up period.
Year-over-year revenue decreased 56% with average drilling rig
activity down 57% primarily as a result of decreased cementing and
fracturing activity, as well as lower pricing. Operating margin for
the fourth quarter of 2009 was (3)%, improved from (67)% in the
previous quarter and down from 15% in the same quarter in the
previous year. The sequential margin improvement was primarily the
result of emerging from the seasonal decline in drilling activity
in the third fiscal quarter associated with the spring break-up
period. The year-over-year margin decline was largely attributable
to lower drilling activity and lower pricing. International
Pressure Pumping Services fourth quarter 2009 revenue of $257.6
million was virtually unchanged compared to revenue of $258.1
million in the fiscal third quarter, with average active drilling
rig levels decreasing 2% for the same period. Revenue compared to
the same quarter last year decreased 23% with average active
drilling rig count down 16%. Historical results for the
International Pressure Pumping Services segment have been restated
to exclude our operations in Russia, which were reclassified as
discontinued operations in the fourth quarter of fiscal 2009.
Percentage changes in revenue by region compared to the third
quarter of fiscal 2009 and the fourth quarter of fiscal 2008 are as
follows: Region Sequential Year-Over-Year ------ ----------
-------------- Europe 0% -23% Middle East -8% -29% Asia Pacific -6%
-22% Latin America 11% -18% --- --- Total -0% -23% === === The
sequential improvement in Latin America is largely attributable to
increased activity in Brazil, Venezuela and Colombia, partially
offset by industry labor strike-related activity decreases in
Argentina. The sequential decline in the Middle East is primarily
attributable to lower activity in India and Azerbaijan, partially
offset by increases in Saudi Arabia, Kuwait and Kazakhstan. The
sequential decrease in Asia Pacific is largely the result of lower
activity in Malaysia and Vietnam. Sequential revenues in the Europe
segment were flat overall, as increases in Norway were offset by
declines in the U.K. and the Netherlands. Year-over-year, revenues
decreased significantly in each segment of our International
Pressure Pumping operations with average active drilling rigs
declining 16%. The Middle East decrease was primarily the result of
decreased activity and lower pricing in Saudi Arabia, India,
Azerbaijan and Kazakhstan. The Asia Pacific decrease reflects
decreased activity levels in China, New Zealand and Malaysia,
partially offset by higher revenue in Australia. Latin America was
negatively impacted by labor strikes in Argentina and decreased
activity in Venezuela. The decline in Europe is primarily due to
lower activity and lower pricing in the North Sea and lower
activity in Nigeria and the Netherlands. Operating income margin
for International Pressure Pumping was 8% for the fourth quarter of
fiscal 2009, compared to 11% in the previous quarter and 17% for
the same quarter last year. Sequential margin improvement in the
Middle East and Europe regions were more than offset by lower
margins in Asia Pacific and Latin America. Year-over-year margins
were lower in every region due to the overall market decline and
lower prices in certain markets. The lower margins were primarily
due to activity declines and pricing pressures in certain
international markets and charges totaling $4.5 million for
unfavorable outcomes of a tax court ruling and a customer dispute
recorded in the fourth quarter of fiscal 2009. We completed work on
our final pressure pumping contract in Russia in July 2009.
Consequently, we classified the Russia pressure pumping unit as a
discontinued operation in the fourth quarter of fiscal 2009.
Accordingly, the historical results of our Russian pressure pumping
operations have been reclassified for all periods presented. We
have begun the process of redeploying and liquidating assets
associated with this business. We recorded charges totaling $6.6
million in connection with these exit activities, including
employee separation costs, fixed asset and inventory impairment
charges and freight costs to redeploy certain pressure pumping
assets into other markets. Oilfield Services Group fourth quarter
2009 revenue of $218.9 million increased 18% sequentially, but
decreased 23% year-over-year. Percentage changes in revenue by
division compared to the third quarter of fiscal 2009 and the
fourth quarter of fiscal 2008 are as follows: Division Sequential
Year-Over-Year -------- ---------- -------------- Tubular Services
-8% -33% Process & Pipeline Services 10% -22% Chemical Services
2% -20% Completion Tools 83% -28% Completion Fluids 30% -11% ---
--- Total 18% -23% === === All of our Oilfield Services Group's
operating segments, with the exception of Tubular Services,
reported sequential revenue increases in the fourth quarter of
fiscal 2009. Completion Tools showed the largest sequential
increase in revenue, reflecting a number of relatively large
project-related international sales in the fourth quarter.
Completion Fluids benefited from new contracts in Mexico and
increased deepwater revenue in the Gulf of Mexico. Process &
Pipeline Services experienced high seasonal activity for its
process business, particularly in Europe. The sequential decrease
in Tubular Services revenue is primarily attributable to various
drilling project delays and generally lower drilling activity.
Year-over-year, Process & Pipeline Services revenues declined
primarily due to lower demand for our services and the completion
of certain large international projects during fiscal 2009. Tubular
Services revenues declined primarily due to lower service activity
primarily in the Gulf of Mexico, the Middle East and Asia Pacific.
Chemical Services and Completion Fluids revenues declined primarily
as a result of decreased activity in the United States. Completion
Tools revenues also declined primarily due to lower tool sales in
the U.S. Gulf of Mexico and lower tool services in Canada. The
Oilfield Services Group operating income margin for the quarter was
14%, up from 6% in the previous quarter and down from 21% in the
prior year's fourth quarter, reflecting the impact of revenue
variances described above. Primarily as a result of lower than
expected profit for our North American operations, and the
resulting change in the geographic mix of our pre-tax income for
fiscal 2009, our effective tax rate for fiscal 2009 changed from an
estimated 25% as of June 30, 2009, to 14.5% as of September 30,
2009. Accordingly, we revised our year-to-date income tax expense
to reflect these revised expectations, and as a result, our net
income tax benefit for the fourth quarter of fiscal 2009 was 90% of
our pre-tax loss from reported continuing operations for the
quarter. Consolidated Geographic Highlights The following table
reflects the percentage change in consolidated revenue by
geographic area for the September 2009 quarter compared to the June
2009 quarter and the September 2008 quarter. The information
presented is based on our combined service and product line
offering by geographic region. Region Sequential Year-Over-Year
------ ---------- -------------- U.S. 10% -53% Canada 100% -48% ---
--- Total 19% -53% === === Latin America (incl. Mexico) 16% -8%
Europe/Africa 8% -14% Middle East -10% -37% Asia Pacific -1% -26%
--- --- Total 13% -42% === === Additional Information The Company
will not hold a conference call following this earnings release.
However, the Company intends to file its Annual Report on Form 10-K
for the fiscal year ended September 30, 2009 with the Securities
and Exchange Commission (the "SEC") later today. A copy of the
Annual Report is available on our web site at
http://www.bjservices.com/. Stockholders may request a printed copy
of our complete audited financial statements free of charge by
forwarding a written request to Investor Relations, BJ Services
Company, P.O. Box 4442, Houston, Texas 77210-4442. In addition, on
October 14, 2009, Baker Hughes (NYSE:BHI) filed with the SEC a
Registration Statement on Form S-4, which includes a preliminary
joint proxy statement of Baker Hughes and the Company regarding the
proposed merger of the Company into a subsidiary of Baker Hughes.
The joint proxy statement/prospectus and such other documents
related to the Company may be obtained from the Company from our
web site at http://www.bjservices.com/ or by directing a request
to: BJ Services Company, P.O. Box 4442, Houston, Texas 77210-4442,
Attention: Investor Relations, or by phone at 713-462-4239. This
news release contains forward-looking statements that anticipate
future performance such as the Company's prospects, expected
revenue, expenses and profits, strategies for our operations, and
other subjects, including conditions in the oilfield service and
oil and natural gas industries and in the U.S. and international
economy in general. These forward-looking statements are based on
assumptions that may prove to be inaccurate, and they are subject
to risks and uncertainties that could cause actual results to
differ materially from the results expected. These risk factors
include, but are not limited to, general economic and business
conditions, global economic growth and activity, oil and natural
gas market conditions, political and economic uncertainty, and
other risks and uncertainties described in our Annual Report on
Form 10-K and subsequent public filings with the SEC. BJ Services
Company is a leading worldwide provider of pressure pumping, well
completion, production enhancement and pipeline services to the
petroleum industry. (NOT INTENDED FOR DISTRIBUTION TO BENEFICIAL
OWNERS) DATASOURCE: BJ Services Company CONTACT: Jeff Smith of BJ
Services Company, +1-713-462-4239 Web Site:
http://www.bjservices.com/
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